Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q3 to date is in line with the 5% to 9% growth targets.
- Strong underlying progress in year-on-year growth rate and revenue growth in Q3.
- Successful launch of upgraded bet builder, driving improved revenue and profitability.
- Significant structural improvements and cost-saving measures implemented.
- Strong liquidity with nearly GBP300 million total liquidity at the end of June.
Negative Points
- First-half financial results were disappointing and not acceptable.
- Revenues down 2% and adjusted EBITDA margin of 13% to 14%.
- Net cash, excluding customer balances, dropped by GBP12 million in the half.
- Leverage increased from 5.6 times to 6.4 times.
- High marketing investment did not yield expected returns, impacting adjusted EBITDA.
Q & A Highlights
Q: Can you provide more detail on the impact of Euro 2024 on current trading?
A: Sean Wilkins, CFO: We had very strong margins for key friendly results, which somewhat suppressed staking. However, the Bet Builder, relaunched before the Euros, was extremely successful, taking over 20% of staking. This sets us up well for the new football season. The bookie-friendly results were mainly in June, so the second half of the tournament was neutral to growth in H2.
Q: Could you clarify what percentage of growth came from the Euros in H1? And what are the key events in H2 that can help you achieve the 5% to 9% growth target?
A: Sean Wilkins, CFO: We haven't disaggregated the growth into Euros and other. Per Widerstrom, CEO: For H2, we are focusing on core markets, bonus efficiency, improved price positioning, and sophisticated customer segmentation. Structural improvements like customer lifecycle management and product enhancements will also drive growth.
Q: Can you please update if you've had conversations with rating agencies post revision of earnings outlook for this year? And can you guide on working capital and CapEx development in H2?
A: Sean Wilkins, CFO: We have a positive ongoing relationship with rating agencies. For H2, net working capital will be neutral, and CapEx is expected to be GBP75 million to GBP80 million. We expect cash to be neutral in H2, with liquidity at roughly GBP300 million.
Q: Could you elaborate on the strategic progress in the 40% of international online markets you define as 'optimize'?
A: Per Widerstrom, CEO: We are focused on core markets for podium positions. Optimized markets aim to maximize underlying cash flow with disciplined ROI. Improvements in customer lifecycle management and product enhancements will benefit these markets.
Q: Could you give some color on current trading? Are you already in the range for H2 or is incremental improvement from Q2 placing you to deliver it?
A: Sean Wilkins, CFO: We have seen growth of 5% to 9% in the first part of H2, consistent with our targets.
Q: How is profitability during this period looking compared to the 21% margin guidance?
A: Sean Wilkins, CFO: We don't disclose specific profitability figures at this point, but we have good visibility on the bridge from H1 to H2, with most factors under our control or already delivered.
Q: Please give us an update on 888AFRICA.
A: Per Widerstrom, CEO: 888AFRICA is performing strongly, with first-half revenues up nearly three times. We see strong lead indicators for future growth and are confident in its value generation potential.
Q: What percentage of international revenue do you expect to come from core markets in the next 12 to 24 months?
A: Sean Wilkins, CFO: While we don't give specific guidance, over 50% of our international revenue comes from core markets, which are growing significantly faster than optimized markets.
Q: What are the key drivers of international growth, and do you expect these trends to continue?
A: Per Widerstrom, CEO: We are focused on core markets with strong growth potential. Optimized markets are managed for cash flow with disciplined investment. Improvements in customer lifecycle management and product enhancements will support growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
